Saturday, June 30, 2007

Big Ethanol wins big on CAFE

... the ethanol industry — already profiting from a smorgasbord of federal and state subsidies and mandates — will likely find riches in the more stringent Corporate Average Fuel Economy (CAFE) standards being adopted in Congress.

In 1988, however, Congress passed the Alternative Motor Fuels Act, carving out an exception to CAFE standards. If you made a “flex-fuel” car — a car that could run on a blend of 85 percent ethanol (any car can run on 10 percent ethanol, but most cannot handle a fuel blend of mostly ethanol) as well as gasoline — that car would give you huge credits toward your CAFE requirements.

The federal government would multiply ethanol’s mileage by 6.6 and assume all flex-fuel cars would use ethanol half the time. This means a car that gets 20 mpg on gasoline and 15 mpg on ethanol would be treated for CAFE purposes as if it got 60 mpg.